| ||
|
|
|
|
|
| ||
|
|
|
|
|
How to Secure the Best Mortgage Deal and Save Yourself Thousands in Interest
When you consider that the average home owner will pay out far more in interest over the lifetime of their mortgage than their home actually cost in the first place, you can see why working to secure yourself the best possible mortgage deal now could save you tens of thousands of dollars in interest over the 25 - 30 year lifetime of your home loan. For the majority of us our house is the single most important and expensive purchase we ever make! Because this is the case we invest a lot of time and effort into finding the perfect property in the most ideal location, however few of us invest the time and effort we should into researching and securing the best possible finance method for purchasing our home. This article will give you a few pointers to make the search for the most ideal and personally suitable mortgage that much simpler; and bear in mind that your search for the best loans and repayment vehicles currently available can be carried out on the internet, making the whole process that much more convenient and time efficient for you. Step One - Firstly you need to understand the different types of mortgage that are available - they come in many flavours! By taking the time to understand the way the different types of loan work, you can see which type suits you and your personal circumstances best - after all it most certainly isn't a case of one mortgage type suiting all people! At their most simple level most mortgages fall into one of the following categories. Different lenders will have their own variations on the theme, but if you understand the basics of the following loan categories you will be armed with sufficient data to move on to step two. Fixed Rate Mortgages - a borrower pays a fixed interest rate for a fixed period of time and usually the longer the fixed period the higher the fixed rate. This type of mortgage protects the borrower from interest rate fluctuations and payment uncertainties but it does mean that when the loan term begins the borrower is usually paying above the best interest rates available. In the US and most other countries apart from the UK you can have a fixed rate for the duration of your mortgage. In the UK it is usual to only fix for a maximum of 10 years. Adjustable or Variable Rate - the rate of interest payable by a borrower can vary. Lenders usually keep their interest rate fluctuations in line with the Bank of England's base rate in the UK and the rate set by the Federal Reserve Board in the US. Certain lenders offer discounted variable rates for home loans for a fixed period to attract borrowers. The attraction of this type of mortgage is that initial rates are usually far lower than offered under the terms of a fixed rate mortgage?however over a period of time the interest rates can rise considerably and make borrowing far more expensive. Furthermore the fluctuations make it difficult for a borrower to know how much he will be paying from one month or one year to the next. To offset the risk associated with an adjustable rate mortgage some lenders offer 'capping' options. Sometimes they fix the maximum level to which the interest rate you are subject to can rise for a given period of time, sometimes they fix the cap per year and sometimes for the lifetime of the mortgage. Balloon Mortgages - popular in the US with homeowners who aren't planning to stay in their new home for life, these mortgages are usually repayable in 5 - 7 years. They offer the advantage of lower interest rates but the disadvantage that if you are still in the home after the 5 or 7 year period you have to secure a new loan to pay off the balloon mortgage! Jumbo Mortgages or 'Non-Conforming' Mortgages - the UK doesn't have an equivalent of this US loan type. Basically in the US there is a legislated purchase limit set each year by the Federal National Mortgage Association (nicknamed Fannie Mae) and the Federal Home Loan Mortgage Corporation (nicknamed Freddie Mac), a jumbo loan allows the borrower to borrow over and above this amount but for the privilege they will incur higher interest rates. Step Two - having identified which type of mortgage probably suits you best you need to consider repayment methods and you basically have two to choose from: - Interest Only - your monthly repayments to your lender cover only the interest on the loan meaning that nothing you pay back goes towards repaying the borrowed amount; it is up to you to establish some form of savings vehicle over the lifetime of the loan period into which you pay sufficient sums to ensure you have enough capital at the end of the loan period to pay back the amount borrowed. Capital & Interest - your monthly repayments are divided into an interest payment and a capital repayment. In the early years of the loan period most of the monthly payment is swallowed up in interest but over time the balance swaps and you start to pay off more of the capital sum borrowed. Step Three - Now you know which mortgage type and which repayment method you favour it's time to find the right lender! There are so many lenders offering such a variety of loans that at first it can seem a daunting prospect trying to determine which lender most suits you! However, depending on the strength of your credit record, your current employment position, how much you would like to borrow and how much of a down payment you are in a position to make, some lenders will rule themselves out and some will seem more attractive to you. It is possible to approach an independent mortgage broker or independent financial adviser to assist you with your search. Such an individual will examine the product market place and apply his expertise to locating the best lender to suit his client's requirements. Most of these brokers are paid a commission by the lender when you take out your mortgage; however some also charge you a fee. Make sure you find out from the broker whether you will be charged as this is potentially an additional fee you could well do without! Finally - there are a lot of informative sites and tools like mortgage calculators available on the internet to provide you with, for example, an idea of how much you can borrow and the most efficient borrowing and repayment method to suit you and also to give you an insight into the lenders themselves. By making use of all the tools and resources available to you and by doing your home work you will be informed and this will strengthen your loan buying position. Rhiannon Williamson is the publisher of http://www.shelteroffshore.com/ - the online resource for offshore and international real estate investors. If you're thinking of buying real estate abroad for investment or retirement, or you're searching for a dream holiday home in the sun visit http://www.shelteroffshore.com/index.php/property/ for a comprehensive range of free guides and articles to help you on your way, or to contact an international mortgage broker.
MORE RESOURCES:
Google News |
|
|
|
RELATED ARTICLES
6 Things to Consider Before Refinancing Perhaps you're a homeowner in need of some quick cash.Maybe you want to consolidate your debts so you have better control of your money. Mortgage Terms Explained When you are hunting for a mortgage, you will find that there are many different types of mortgages available. I will list some of the more common ones and their uses. Thought You Can Go All Alone In Mortgages! Mortgage Advice Beneficial In All Important Decisions Mortgages are easy as long as you understand them well. But how many borrowers can be confident of their knowledge of mortgages. How to Use a Home Equity Line of Credit Calculator Most home owners know that the lower the interest rate, the lower the monthly payments. But then the process may get a bit fuzzy. Reverse Mortgages - A Tax Free Income For Senior Citizens I fully realize if it sounds too good to be true, it probably is and There Ain't No Such Thing As A Free Lunch (TANSTAAFL) immediately jumped into your head when you read the title of this article. However, if you are 62 or over, you may have just found the goose that laid the golden egg. Online Mortgage Brokers - What You Might Not Know About Home Loans & The Internet You may think that applying online for a mortgage is the same as applying with a broker in the 'real world', only more convenient.While applying for a mortgage online is much more convenient, and sure to help you get a lower rate because of the amount of competition online, there is another benefit to using the internet when applying for a loan. Choosing a Real Estate Agent Before you go looking at houses, you'll need to find a real estate agent. Hiring a real estate agent takes a little bit of time to do. Home Equity Loans A home equity loan allows you to cash-in on the equity you have built-up in your home. The funds you receive can be used for debt consolidation, home improvement, college education, investments or any purpose. Why Choose a Home Owner Loan? Most people choose a home owner loan as it can release the capital that is tied up in their property for immediate use. The loan can be used for any purpose, and is available to anyone who owns their home. Why Its Important to Get Pre-Approved Having a pre-approved mortgage will give you the confidence of knowing exactly what you can spend on a home before you start looking. You will also be protected against interest rate increases while you look for your new home. Poor Credit? Get a Sub-Prime Mortgage Now, and Refinance to a Conventional Mortgage Later There are great mortgage loans for people with poor credit, and yes, you can still save thousands of dollars. In order to receive preferential treatment for mortgage professionals, you'll need a credit score of 680 or better (this is considered A credit). Top 5 Methods to Manage Your Home Equity As your home appreciates in value, you gain equity. You can look at this equity, as a portion of the value of your home, which becomes an asset that is not burdened by debt. The Top 5 Reasons to Buy a Home 1. Save on your income tax. Council Right to Buy Mortgage - Helping Everyone Have a Home of "We will help every Council Tenant to become Home Owners" With these historic words Margaret Thatcher initiated an equally historic concept of council right to buy scheme. However, the groundwork for this scheme had been laid much before in the 70s under the reigns of the labour government. Refinancing and Car Finance - Is it worth it? Refinancing and Car Finance - Is it Worth It?No doubt you have heard of refinancing your mortgage. It has become all the rage, but now you can also refinance your car loan. Get the Best Rate on Your Home Mortgage Loan Home mortgage interest rates hit record lows in 2004 and have remained at record lows as we go through 2005. It is possible today to get a thirty-year fixed rate home mortgage loan for under five percent, and an adjustable rate mortgage can be found for under four percent if you look hard enough!However, record low mortgage rates do not mean that you should take the first mortgage offer made to you, even if it sounds low. Some Mortgage Loans are Available with Absolutely no Money Needed From You Today, FHA will loan up to 97 percent of the purchase price of a home, meaning a borrower only needs 3 percent. The three percent down payment can come in the form of a gift, and closing costs can be financed into the loan, making this a true no money out of pocket purchase transaction. FHA Mortgage: When Your Downpayment is a Gift There has been so much fraud discovered in the FHA program allowing gift funds for downpayment that Lenders and borrowers are required to absolutely document every step of the gift transaction to prove it was legitimate.Here's how it works: FHA allows the required downpayment to be a gift from someone who would logically be concerned about housing for the borrower. Bad Credit Home Loans There was a time that seems like decades ago when people with less than pristine credit were not able to get home loans. At that time people with bad credit were all but assured that their dreams of homeownership would never come to fruition. 4 Things to Watch Out for When Choosing a Mortgage Company We all know that there are a lot of mortgage companies out there. But how do you know which company to choose? Some companies have flashy advertisements about low interest rates, but are they really the best company to choose? A mortgage is a very large investment, so the company that you choose has to be the best company out there for you.
|
| Home | Privacy Policy & Legal Information | Contact |
